DIW research director to ‘N’: Implement reforms to achieve lower taxes

By Vassilis Kostoulas
[email protected]

The research director of a top German economic think tank told “N” this week that a Greek government that applies a pre-legislated reduction in the tax-free annual income threshold – now set for Jan. 1, 2020 – and implements agreed structural reforms will be able to “impose” its position over less painful fiscal targets.

Greek-German economist Alexander Kritikos, who leads the research unit of the Berlin-based German Institute for Economic Research (DIW), said such a Greek government would have an indisputable argument by which to persuade its European creditors that now high annual primary budget surplus goals – as a percentage of GDP – must be cut. The specific fiscal target, according critics, including most of the opposition in the country, maintains high tax rates – direct and indirect – against taxpayers, consumers and businesses.

Kritikos added that the major challenge for the recovering Greek economy is to shift activity still in the “grey” or “off-the-books” sector to the official economy. He also cited what he called an absolute lack of incentives for new businesses to open in the country.

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Additionally, the noted economist said a portion of the excessively high surpluses should be funneled into the re-inclusion of unemployed people back into the workforce.